Having children can change a household’s finances faster than its income can adjust.

A larger mortgage, childcare costs, parental leave, reduced working hours and future education expenses can all arrive while parents are still trying to build savings, pay down debt and prepare for retirement.

For many parents on the Gold Coast, this is also when financial planning becomes more important. It is no longer simply about how much you can save or invest. It is about deciding how your resources should be divided between competing priorities while protecting the family if something unexpected happens.

At RFS Advice, we believe several areas deserve particular attention as a family grows, including: cash flow, personal insurance, superannuation, education savings and estate planning.Why family financial

Why family financial planning needs to grow with your family

A financial plan built in your twenties or early thirties may look very different once you have children.

Financial planning for parents means revisiting your priorities whenever your circumstances change. That could be the birth of a child, taking on a larger mortgage, one parent reducing their working hours, returning to work after parental leave or children starting school.

The issue is not necessarily that a household is earning too little. A family can have a healthy income and still feel financially stretched if its expenses, debt and responsibilities have increased just as quickly.

This is where a coordinated plan becomes valuable.

Rather than treating the mortgage, insurance, super, investments and education savings as separate decisions, financial planning considers how they fit together. Putting more money towards one priority will generally mean having less available for another, so understanding those trade-offs matters.

Start with your family’s cash flow

Before deciding how much to invest or contribute to super, it helps to understand what is happening with the money coming into and leaving the household.

Growing families often experience significant changes in both directions.

Income may temporarily fall during parental leave or when one parent reduces their hours. At the same time, childcare, groceries, insurance, healthcare, schooling and housing costs may increase.

Budgeting and cash flow advice can help identify three important numbers:

• how much surplus cash flow is available after those expenses
• how much should remain accessible for unexpected costs.

That information can then guide decisions about debt reduction, super contributions, investing and saving for children’s education.

Building an emergency buffer

An emergency fund can provide a financial safety net if a family faces an urgent expense or temporary loss of income. Moneysmart suggests aiming for enough to cover around three months of expenses, although the appropriate amount will depend on the household.

A family relying heavily on one income, for example, may decide it needs a larger buffer than a household with two secure incomes and relatively low debt.

The money also needs to be accessible. Some families use a separate high-interest savings account, while homeowners may use a mortgage offset account. Money held in an offset account reduces the portion of the home loan on which interest is charged while generally remaining readily accessible.

The important point is that an emergency fund is designed to provide financial breathing room. Without one, an unexpected expense or period without income can result in families needing to rely on credit or sell investments at an inconvenient time.

Protect the income your family relies on

Once other people depend on your income, personal insurance becomes an important part of wealth protection strategies.

The question is not simply whether you have insurance. It is whether the amount and type of cover still match your family’s circumstances.

Depending on your needs, this may include:

• life insurance, which can provide a lump sum if the insured person dies
• total and permanent disability (TPD) insurance, which can provide a lump sum if you meet the policy’s definition of total and permanent disability
• income protection insurance, which may replace part of your income if illness or injury prevents you from working
• trauma or critical illness insurance, which may provide a lump sum following specified serious medical events covered by the policy.

The appropriate level of cover depends on factors including your mortgage and other debts, household expenses, existing savings, your partner’s income and the ages and needs of your dependents.

It can also change considerably over time.

A couple with a new baby, a large mortgage and limited savings may have very different insurance needs from the same couple 15 years later when their mortgage is smaller, their investments have grown and their children are becoming financially independent.

That is why insurance is worth reviewing rather than simply setting up once and forgetting about it.

Don’t lose sight of superannuation

Superannuation can feel a long way down the priority list when you are paying for nappies, childcare or school shoes.

But years spent working reduced hours can have a long-term effect on retirement savings, particularly if one parent takes repeated career breaks.

For families with sufficient cash flow, voluntary concessional contributions can therefore be one way of building retirement savings while potentially receiving tax benefits.

Families should be careful not to focus solely on the tax benefits, however. Money contributed to super is generally preserved until a condition of release is met, so additional contributions need to be considered alongside mortgage repayments, emergency savings and shorter-term family expenses.

What if one parent works less?

Superannuation planning can become particularly important when one parent reduces their hours or leaves paid employment temporarily.

Depending on eligibility, couples may be able to consider strategies such as spouse super contributions, contribution splitting and personal after-tax contributions that may qualify for the government super co-contribution.

For eligible low and middle-income earners who make personal after-tax contributions, the government co-contribution can be worth up to $500, with the amount depending on income and the amount contributed.

Making eligible super contributions on behalf of a lower-income spouse may also provide the contributing spouse with a tax offset of up to $540, subject to the relevant conditions and income thresholds.

These strategies can help address the retirement savings gap that can develop when one person spends several years earning less while caring for children.

For families considering retirement planning in the Gold Coast, looking at each partner’s super separately can therefore miss part of the picture. The more useful question is whether the couple is collectively building sufficient retirement assets while still meeting today’s family expenses.

Saving for your children’s education

Education is another goal where starting early can make a significant difference.

The first step is deciding what you are actually saving for.

For some families, the goal may be private school fees. For others, it could be extracurricular activities, university expenses, accommodation or simply giving their children some financial support as young adults.

Once the goal and timeframe are clearer, families can consider how to save for it.

Options might include:

• a savings account
• using surplus cash in a mortgage offset account
• investing in a diversified portfolio
• an investment bond, where appropriate.

Each option has different implications for investment risk, tax, access to the money and flexibility.

For example, money kept in an offset account remains readily accessible and can reduce home-loan interest, but it does not provide direct exposure to investment markets. An investment portfolio may offer greater long-term growth potential but will also fluctuate in value and may have tax consequences.

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Child investment planning should therefore start with the timeframe and purpose of the money rather than the investment product.

Families considering education funding on the Gold Coast can also look at this goal alongside their mortgage, emergency savings and retirement strategy. Saving aggressively for school or university costs may not make sense if it leaves the family with inadequate emergency savings or expensive consumer debt.

Estate planning becomes more important once you have children

Financial planning is also about what happens if you are no longer able to make financial decisions yourself or are no longer there to support your family.

For parents, this makes estate planning particularly important.

A comprehensive review may include:

• a current Will
• appropriate arrangements concerning guardianship of minor children
• an enduring power of attorney
• reviewing ownership of major assets
• reviewing superannuation beneficiary arrangements
• considering whether more complex estate-planning structures are appropriate.

Super deserves particular attention because beneficiary arrangements need to be considered separately from the instructions contained in a Will.

Depending on the fund and your circumstances, a valid binding death benefit nomination may provide greater certainty about who receives your super death benefit. Most binding nominations expire after three years, although some super funds offer non-lapsing nominations.

This makes beneficiary nominations something families should review periodically, particularly after major life changes such as marriage, separation or the birth of a child.

Estate planning is a legal area, so financial advisers will generally work alongside an appropriately qualified solicitor where legal advice or documentation is required.

Bringing the pieces together

The challenge for growing families is rarely a shortage of financial goals.

You might want to pay the mortgage off sooner, build investments, increase super, pay for your children’s education and still have enough money to enjoy family life today.

You probably cannot maximise every goal at the same time.

Good financial planning is therefore partly about prioritisation. It can help you understand which goals require attention now, which can wait and how a decision in one area affects the rest of your financial position.

A financial planner on the Gold Coast can help bring cash flow, insurance, superannuation, investments and longer-term family goals into a coordinated strategy, then review that strategy as circumstances change.

For example, the birth of another child might reduce the amount available for investing. A return to full-time work could create an opportunity to rebuild super. Paying down a mortgage may eventually free up cash flow for investment or retirement savings.

The plan should move as your family does.

When should families review their financial plan?

There is no single timetable that suits everyone, but significant life events are useful prompts for a review.

These can include having a child, buying or upgrading a home, changing jobs, taking parental leave, receiving an inheritance, starting a business, experiencing a significant change in income or approaching retirement.

Regular reviews also provide an opportunity to check whether your existing strategies are still appropriate as tax rules, superannuation thresholds, investment markets and personal circumstances change.

Conclusion

A growing family needs a financial plan that can change as its circumstances do.

Cash reserves provide resilience. Insurance can protect against financial shocks. Superannuation helps fund the future. Education savings can prepare for major family expenses. Estate planning can help ensure the structures around your wealth continue to reflect your wishes.

But none of these decisions exists in isolation.

Family wealth management aims to find a balance that allows you to meet today’s responsibilities while continuing to work towards tomorrow’s goals.

If your family’s circumstances have changed recently, RFS Advice can help you review how these pieces fit together. Get in touch to discuss financial planning for your growing family and how your current income, commitments and longer-term goals could form part of a broader strategy to secure your financial future.

Frequently asked questions

How much life insurance does a family with young children need? Should I save for my children or contribute more to super? Should both parents have life insurance? Do I need a Will if I have young children?

General advice warning:

The information and any advice provided in this article has been prepared without taking into account your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things.